Hey Spotify, Why Don't You Buy eMusic?

I pay about $20 for a monthly allotment of indie MP3s from eMusic, and have for years. I appreciate the flat rate and the flexibility of DRM-free downloads. But the company hasn’t done much for me lately; this summer it added Sony (s sne) back-catalog content while making member plans more expensive and less generous.

eMusic and its owner JDS Capital Management, facing slow growth and seeing the acquisition of competitors like Lala, are looking to sell to someone like Best Buy (s BBY) or Rhapsody (aka RealNetworks) (s RNWK) and/or introduce streaming music to jump-start growth, The New York Post today reports.

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Streaming is not a bad way to go in this day and age. But eMusic’s library, even if it can close additional major label back-catalog deals, wouldn’t be able to compete with more complete streaming offerings like Rhapsody. Still, eMusic already has something like 400,000 paying subscribers and $65-70 million in annual revenue — nothing to sneeze at. And if those other 399,999 users are anything like me, we’d appreciate more functionality, not less.

Perhaps a better acquirer or merger candidate would be Spotify, the European darling that would really love to have an American business. Spotify also employs a flat-rate model, though it doesn’t do downloads. Sure, it’d have to raise some money to make it happen, but everyone would benefit from the deal, users included.

Why? Because, like eMusic, Spotify and the majors behind them know their days are numbered. Spotify does not really need the eMusic catalog. Not to mention that eMusic does not bring any innovative technology to the table. Right, eMusic has thousands paying subscribers, most of them are die-hard Indie music fan. I’m not sure that is Spotify’s target audience.

It shouldn’t come as any surprise that eMusic is ready to bury the wonderful service they built for “those interested in music beyond the commercial mainstream pop charts,” as David Pakman used to say before he left the boat.

It’s time for JDS to buy some cool, tech-driven music startup to save eMusic. Otherwise, eMusic will end up like SpiralFrog.